➢General layer case analysis: Entangled Rollup & GOAT Network
Today I will continue yesterday's topic of [Universal Layer] and expand on another solution for building the [Universal Layer] state and a case study that has already been implemented. The full text is about 3,400 words.
📍I think the [universal layer] trend is the way out for Rollup amid the current Ethereum downturn.
By connecting yourself to other ecosystems, you can seek more application scenarios.
In terms of functionality, there has been a trend of multi-chain interoperability. With the emergence of this trend, I think the primary and secondary relationship is not how much other L1s need an L2, but that these L2s need to take the initiative to be compatible with those L1s with relatively active ecosystems.
1. Leading Universal Layer Solution: Entangled Rollup from ProjectZKM🔻
It seems that since OP launched the super chain, coupled with the rise of modular narratives, a number of solutions that can quickly build L2 have begun to appear in the market (ALT is working on this track).
This is also the source of the subsequent mass emergence of Rollup applications;
As mentioned before, the trend of applying Rollup will not stop and will become an alternative solution for a team to build applications in the industry.
Therefore, the main competition at present is no longer limited to Rollup, but the upstream Rollup construction to support the development of application chains.
The solution currently provided by Entangled Rollup is actually slightly similar in logic to the solution provided by OP, but it is one step ahead in terms of chain interoperability: the Entangled Rollup solution allows Rollup to naturally support cross-chain interoperability from the beginning of its construction.
The core idea of Entangled Rollup is to "entangle" the underlying mechanisms of different blockchains together and synchronize the status through recursive zero-knowledge proofs.
Let two independent L1s achieve interconnection through L2 built on the same framework [it is even possible to achieve a universal layer structure in which one L2 connects multiple L1s].
In fact, you don’t need to know the specific principle of how it is implemented. You just need to know that under the influence of this solution, there will be two possibilities in the market:
(1) Between two L1s, L2 can realize cross-chain interoperability between the two L1s
(2) One L2 connects multiple L1s
The common point of the above two possibilities is that the function and logic of L2 begin to resemble a cross-chain bridge.
It feels a bit like joining if you can't beat them, but I think it still needs to be reiterated that it is not that some L1s need L2s, but that this solution allows the execution layer to have more service objects, expands the user group of potential market use cases, and gives some L2s more possibilities.
2. Universal layer solution to unlock $BTC capital efficiency: GOAT Network🔻
GOAT is built based on the Entangled Rollup universal layer solution introduced above. In addition to having the characteristics of the universal layer, it also needs to focus on some differentiated details outside the universal layer.
At the same time, GOAT is also divided into phases. Although it is based on the Entangled Rollup solution, it will focus more on becoming a BTC L2 in the first phase.
In terms of the composition of the sorter, GOAT prioritizes decentralizing the sorter network: this concept is what almost all rollups need to pursue. It does not mean that this stage will bring a huge increase in the business, but as the infrastructure and application of Web3, [decentralization] naturally has the highest priority.
In the Ethereum Rollup pedigree, Metis is the first to implement this stage of Rollup, while GOAT is currently a Rollup that cuts into the BTC ecosystem, and also places decentralization of the sorter at a relatively high priority. In addition, for the operation of the sorter, the pledged asset is BTC (goatBTC) encapsulated in a 1:1 ratio on the BTC original chain.
In addition to obtaining certain interest income as a pledged asset, the BTCFI market built on GOAT will create derivative income with encapsulated BTC as the core.
This is also the common point of most BTCFIs, all of which attempt to further unlock the capital efficiency of BTC beyond holding.
In terms of asset attributes, the capital efficiency of BTC in the past was almost 0. It can neither hold shares and receive dividends like securities, nor participate in the on-chain ecosystem like $ETH to obtain some potential currency-based benefits.
It is almost equivalent to that if I hold BTC, I can only wait for it to rise and then sell it to obtain the capital gains from buying low and selling high. The few channels for further obtaining interest may be to put it on the exchange to obtain some interest.
However, with the introduction and development of the BTC ecosystem, BTC holders can obtain potential benefits in multiple aspects such as potential new project airdrops + Defi income pools + node operations, which will enhance the rights and interests of asset holdings and create more abundant market demand.
About GOAT If you are familiar with Ethereum’s L2, you can understand GOAT as: BTC version of Metis+Blast🔺
Under the priority of realizing the decentralization of the underlying architecture, further unlocking the capital efficiency of BTC is what it is mainly doing.
3. Does BTC need BTCFI❓
Yesterday I saw a very interesting debate in a community: BTCCFI is a group of people who don’t have BTC but are trying to find ways to empower BTC.
This statement seems to be correct at first glance, but if you think about it carefully, this formula can actually be applied to any L1. This is why I emphasized the issue of BTC capital efficiency above.
Although GOAT's ultimate goal is to become a [universal layer] for multiple chains based on the [Entangled Rollup] solution, it is still focused on BTCFI at this stage.
This includes continuing the more traditional path of airdropping its own L2 tokens to BTC holders (nodes, ecosystem builders) on the network. In addition, it also allows ecosystem construction around the encapsulated BTC assets. Whether it is anchoring BTC as a trading pair in the pool or building liquidity across the ecosystem, it will promote the native demand for BTC.
I even see a view in the market: BTC does not need an ecosystem, it just needs to become the reserve currency of one or more countries, and then it can enjoy the benefits.
But this matter itself is not a conflict. In terms of capturing the value layer, BTC does not bring more derivative benefits to the holders. This is not the attribute that a good asset should have. It is true that like gold, it has certain industrial value.
4.GOAT's core economic driver🔻
This section will sort out GOAT's seemingly complicated network economic design. From my point of view, it actually makes a lot of improvements on the current mainstream ETH L2 solution.
The economic components of GOAT are as follows:
(1) Decentralized sorter network based on encapsulated BTC🗝️
➢GOAT’s sorter node pledge asset is a packaged BTC (goatBTC), which is a traditional original chain encapsulation and target chain casting anchoring solution. BTC is locked on L1 through a special script for a 6-month lock-up period, which is the basis for becoming a sorter node.
(2) yBTC’s Proof of Stake
➢In addition to becoming a sorter node themselves, ordinary small BTC holders can participate in the profit distribution of the sorter node by participating in the POS mechanism. By staking BTC on GOAT, they will be able to obtain yBTC. This is a design based on the current mainstream liquidity staking interest (it also lays the seeds for future re-staking nesting dolls).
(3) Using yBTC as the economic design for the split🗝️
➢ This yBTC can be divided into pBTC and yToken, which is somewhat inspired by Pendle's debt-interest separation design. Based on a similar design, GOAT has the foundation for rich gameplay in the derivative BTC income market;
➢These two assets are also designed to have an expiration date like Pendle. If you think this design is a bit abstract, I suggest you learn about the Pendle protocol, which may help you understand this design better;
➢GOAT is equivalent to a built-in native [BTC Pendle].
(4) Using goatBTC as on-chain GAS🗝️
➢This is a more traditional L2 design, using L1 assets as on-chain GAS. The only difference between BTC and ETH is that it uses packaged assets instead of native assets. This design also means that the income of the sorter node also comes from BTC.
(5) Native token rights: GOAT🗝️
➢Holders of native tokens can increase ranking rewards and obtain minting and redemption rewards by staking GOAT;
➢ About the minting and redemption rewards: Since there is a one-to-one minting relationship between BTC and goatBTC, the GOAT Foundation will charge a certain redemption fee during the minting and redemption process, such as 0.2% (maximum 0.002BTC);
➢Part of this fee will be allocated to the holders of locked GOAT, and the rest will be used for market repurchase of tokens and ecological development expenses.
The above five points are the economic structure of the entire GOAT network that I have sorted out. It is not difficult to see that this design is actually mainly based on native BTC packaged assets. Through the decentralization of the sorter, holders of different sizes can participate in the basic network operation and benefit from it.
But the supply and demand design naturally relies on the demand for GAS generated on the chain during the development stage, so as to supply the operation of the sorter nodes and L1 mainnet validators.
It can almost be said that the source of the healthy operation of the economic model comes from the active ecology of the network. The more active the network is, the greater the market demand for equity assets such as yBTC may be, and the more active the Defi market that can be derived may be, thereby bringing more transaction fee income to the sorter, and further stimulating the positive lock-up of GOAT.
5. Token Economic Analysis: GOAT & veGOAT🔻
(1) GOAT uses the vast majority of the entire token (42%) to form a mining pool for long-term incentives for the sorter. This is a common practice in POW and even heavy node design networks. However, this design is prone to cause the concentration of token distribution in the trough period of the market or in the high-incidence mining design protocol with its own node center cluster. I have not seen GOAT show this feature (although their early nodes were whitelisted);
(2) Investors account for less than 20% (including KOL rounds), except for the 42% of mining pools and the 20% of the team, which is a relatively large proportion;
(3) At present, I have not found the details of the release of large proportions, so I cannot comment too much, but one thing is certain: the part allocated to the community airdrop is not small, even in the proportion of multiple parties, it is a relatively large part. I just don’t know whether this airdrop is a one-time release or a long-term linear release design;
(4) Regarding GOAT’s staking rights, the more practical benefit is to share the BTC redemption fee and the reward bonus for improving the ranking;
(5) veGOAT: This is a kind of [Proof of Governance] obtained by locking GOAT. This token does not participate in circulation, but is only used as a certificate for network governance and long-term lock-up. This token is more like a special on-chain identity. Through this on-chain identity, you may get bonuses wherever there is income on the basic chain. This is the summary in one sentence, and I will not elaborate on it.
Regarding the design of the general layer, GOAT is currently launched as a BTC L2 solution. I am not sure whether the design will be reconstructed from the source in the future as more ecosystems are connected.
Or should we continue to use the current design centered around $BTC ?
Or in the future, the use of GAS may be optional or automated, because the current launch of intention execution and chain abstraction solutions is actually in line with this development trend of the general layer.
Just imagine, if GOAT is compatible with the TON network in the future, then for users of the TON ecosystem, if they still use $BTC as the core asset to interact, I think it will still be awkward.
At present, I think it is necessary to make some improvements in the design of user account abstraction for this solution.
